Skip to comments.Rush Limbaugh: The US Manufacturing Myth
Posted on 02/09/2011 11:32:17 PM PST by iowamark
RUSH: Here's Robert in Los Angeles. Robert, welcome, sir, to the EIB Network, great to have you with us. Hello.
CALLER: Thank you, Rush. It's a pleasure to talk to you. I just want to take a minute of your time and I want to ask your opinion on something. I constantly keep hearing the president and government officials saying that we need jobs, jobs, and jobs. I have the solution, and I'd like your opinion on this. Domestic manufacturing. We've lost it to China. We have a trade imbalance of about 200 to $300 billion a year. Why don't we either tax them at a higher rate or, my suggestion would be, reduce the taxes on anyone who makes something in the United States and the product that's made here has to be made with maybe 70%, 80% American made. I'd like your opinion.
RUSH: I have to find the story. I do not have it at my fingertips. It was a story within the past month on an anniversary of something, I forget which. It might have been in the Wall Street Journal, and the point of the story was that we are manufacturing more stuff today than ever before in this country. (interruption) Was it after the State of the Union? That was just a couple weeks ago. I thought this was a little bit longer ago than that, certainly this year. We are the number one manufacturer in the world. There's been this myth that we've shipped all of our jobs overseas. Yeah, certain kinds of jobs have been shipped overseas. And one of the misnomers with manufacturing jobs lost, take a look, for example, at the Apple iPhone. Now, the Apple iPhone is assembled in China, but all the guts are not made in China. There are parts made in America, parts made in Switzerland, parts made in parts of Europe. They're just all shipped over to Shenzhen at the manufacturing plant and they're assembled there, but the whole phone is not ChiCom. It's just assembled there. But because it comes from there, it is considered a Chinese-made product, when in fact the guts may not be. And that's how you can report accurately that we still are the number one manufacturing country in the world.
So we are nevertheless allowing the Chinese to manipulate us in a lot of ways. I'm not saying the premise of your call is wrong. We start tariffs on Chinese imports, that just never works. It just never works. The market is speaking. The market here is speaking. If we, given current labor rates and everything else, an iPhone totally put together and made in this country would cost about $1800. Well, people aren't gonna pay $1800 for an iPhone, and Apple knows it. But with all the parts made elsewhere, shipped to China and assembled over there, you can get an iPhone for 200 bucks now with Verizon thrown in as a carrier, in addition to AT&T. So I'm against Smoot-Hawley-type tariffs. I think the way you deal with the ChiComs is diplomatically, and it's tough to deal with them diplomatically when they own so much of our debt. I'm gonna tell you something, Robert. The Chinese ran rings around us in that last state visit of Hu Jintao. We sit here, we talk about human rights, we demand human rights, and we exempt them. We talk about carbon emissions and making sure that we penalize ourselves for our technological process, but not them.
Donald Trump has some I think intriguing, intelligent stuff to say about China, but he does business with them at the same time. Trump does a lot of business with the ChiComs. But in his view, Trump does not lose money doing it nor does he get humiliated or embarrassed in the process. But there are a lot of myths about manufacturing in this country and the trade deficit and all this. We're not nearly as absent manufacturing jobs as people think. Now, we might have lost sectors. I'm having a mental block. Textiles, we mighta lost a lot of the textile industry and we probably don't make many sewing machines anymore. But there are other things that have replaced them on the manufacturing scale, and we're not a totally manufacturing-free economy. It's just one of the many myths that are out there. I'm gonna have to find that story. Somebody on my crack research staff -- well, I'll look for it myself. It will take them 'til June to find it, but I'll come up with it here and -- (laughing) -- I'll probably have it in the break when we get back. BREAK TRANSCRIPT
RUSH: And, as I knew would be the case, we have a couple of stories here on the US and manufacturing. "According to the Federal Reserve data, the U.S. produced almost $3 trillion of industrial output in 2008, measured in 2000 dollars (or about $3.7 trillion in 2008 dollars The US manufacturing sector, the manufacturing sector alone is the third largest economy in the world. Just manufacturing. Compared to the GDP of the top five countries -- Japan, China, Germany, France, UK -- USA manufacturing alone is the third highest GDP, just the manufacturing sector. "If the U.S. manufacturing sector were a separate country, it would be tied with Germany as the world's third largest economy.
"It would also be larger than the entire economies of India and Russia combined. As much as we hear about the 'demise of U.S. manufacturing,' and how we are a country that 'doesn't produce anything anymore,' and how we have 'outsourced our production to China,' the U.S. manufacturing sector is alive and well, and the U.S. is still the largest manufacturer in the world." That's Federal Reserve numbers. This is Jeff Jacoby and his column in the Boston Globe on February 6th, three days ago: "There's just one problem with all the gloom and doom about American manufacturing. It's wrong. Americans make more 'stuff' than any other nation on earth, and by a wide margin," damn it! Yeah.
"According to the United Nations' comprehensive database of international economic data, America's manufacturing output in 2009 (expressed in constant 2005 dollars) was $2.15 trillion. That surpassed China's output of $1.48 trillion by nearly 46 percent. China's industries may be booming, but the United States still accounted for 20 percent of the world's manufacturing output in 2009 -- only a hair below its 1990 share of 21 percent. 'The decline, demise, and death of America's manufacturing sector has been greatly exaggerated,' says economist Mark Perry, a visiting scholar at the American Enterprise Institute in Washington." That's not a liberal think tank.
"'America still makes a ton of stuff, and we make more of it now than ever before in history.' In fact, Americans manufactured more goods in 2009 than the Japanese, Germans, British, and Italians -- combined," and as I've always said it's the European Union that's going to hell when it comes to manufacturing. It's the European Union that is in deep, deep trouble, aside from Germany. France, Great Britain, Italy, they're in trouble as a competitive enterprise. "American manufacturing output hits a new high almost every year. US industries are powerhouses of production:
"Measured in constant dollars, America's manufacturing output today is more than double what it was in the early 1970s. So why do so many Americans fear that the Chinese are eating our lunch? Part of the reason is that fewer Americans work in factories. Millions of industrial jobs have vanished in recent decades, and there is no denying" that. "But factory employment has declined because factory productivity has so dramatically skyrocketed," and not everything anymore that's manufactured in America is made in a factory or a plant.
“German companies somehow manage to compete and pay very good wages.”
One of the reasons might be that they still enjoy the perception by consumers that ;German made’ = high quality. The US used to enjoy that perception, but this has been eroded over the past couple of decades. Deserved or not, it is a problem. Consumers will pay more for a product that they believe is truly better, but not if they think there are less expensive alternatives that are just as good, or better.
It’s not just the economics of building here, it’s that no one knows what Congress will next. It only takes one bill or ruling to make a billion dollar factory idle.
Oh, and I forgot about the legal climate. Every employee is a potential lawsuit.
Look at that inflation = 23% from 2000-2008.
He never said jobs are not going overseas, he just said that we are still a producer. Our manuafturing sector is not employing as many as many as it once did but is still producing products.
We’re not nearly as absent manufacturing jobs as people think. Now, we might have lost sectors. I’m having a mental block. Textiles, we mighta lost a lot of the textile industry and we probably don’t make many sewing machines anymore. But there are other things that have replaced them on the manufacturing scale, and we’re not a totally manufacturing-free economy. It’s just one of the many myths that are out there.
Of course, the workers have obsolete skills.
The total dollar value v. jobs is a serious concern, but it actually reflects incredible productivity gains.
Those gains are in large part driven by liberal efforts to make labor more expensive. That effort simply compounds the bureaucratic (Federal, state and local) effects of taxation and regulation.
Liberals have increased the cost of labor beyond its marginal value.
Hence, high productivity, high value products and high profits to a smaller group (owners/capitalists) at the expense of labor.
Exactly what all Leftist programs do...the opposite of their stated intent.
Unskilled labor is cheap and that is why jobs went overseas. You can’t build a product here and pay employees $30 per hour when the same task can be accomplished for a dollar an hour in Asia. I know that much of our remaining manufacturing is done on high tech equipment but the older, more dangerous equipment we used 25+ years ago is likely being used today in Asia.
Instead of a tariff we could impose a regulation tax. Tax imports to compensate for ridiculous Liberal Anti-Market regulations.
Maybe so BUT he sure can regurgitate 'research' information just fine!
BS. Rush deliberately "couldn't find the WSJ" article that supported his claim. It's about dollars. The whole article was based on the value of manufactured goods in the U.S. vs the rest of the world.
When China makes coffee pots for $5 and the U.S. makes them for $20 that means, in his eyes, we make more.
‘When China makes coffee pots for $5 and the U.S. makes them for $20 that means, in his eyes, we make more.’
Actually if China made coffee pots for $5 and it would cost $10 here, we would make none at all, since nobody would pay $10 for a $5 coffee pot.
BUT, those Asian manufacturers are now taking their profits (off that old 'dangerous' equipment) and investing in competing manufacturing technologies and, MORE IMPORTANTLY, improving their labor force with skills to run and maintain those new manufacturing technologies.
These moves are something that goes crosswise with the our country's union mentality.
then I guess the job would have STAYED IN AMERICA, wouldn’t it?
AMERICANS would be making it, and AMERICANS can MOVE to where the JOBS ARE, couldn’t they??
Did AMERICAN COMMUNIST GOVERNMENTS build up AMERICAN manufacturing bases?
NO! Capitalists did, using their OWN money!
Name ONE foreign company that uses it’s OWN money, until you can name where all our products come from, and which are made on PRIVATE money that invested their OWN money in R&D and development and production, All Rush’s words are just NUMBERS GAMES!
The truth is found in the Bell Curve. It is a statistical fact that one-half of the population is below average in intelligence. Since the industrial revolution, workers in the west have been conditioned to believe that they should work 40 hours per week — no more, no less — for their wages.
The average factory worker is capable of working with physical objects in a repetitive task. This person does not think abstractly or learn new things easily. I’m not knocking them, just stating facts.
You say that the market will not support paying Americans $ 30 per hour for the same job that can be done by an asian coolie at 25 cents per hour, and that is true. But the people on the “wrong end” of the Bell Curve don’t just disappear.
OK, I’ve come across as elitist, now I’m going to go whole hog and say someting that sounds Marxist: somebody is making big bucks off the labor arbitrage, so those somebodys need to pay up to fund the welfare needed to support our jobless citizens.
The Market would say, “Let them starve”, but that’s too Dickensian for me. Also, I don’t want to have to have to build a security wall around my house like they do in South America.
“Of course, the workers have obsolete skills.”
Obsolete skills that are now being employed by many thousands of workers across the globe for pennies. Using machines that used to be manufactured in this country for good wages but have now gone to countries overseas. I don’t know why so many try so hard to defend companies that have screwed over the American manufacturing base.
I do drafting on the side for a company that makes beer taps, they design it here, theyhave parts made in China for pennies on the dollar, shipped here for partial assembly, then ship the parts back to China for final assy, which are then shipped back here and sold...all cheaper than can be done here in total.
Some stuff we made goes in refridgerators, too. designed here, made there, assembled here, shipped back, final assembly there, shipped back, sold here
for half the price after all that.
race to the bottom? You mean race for greater and great efficiency. Thats exactly how we want business to be run, to allocate global resources efficiently in the most profitable manner. This signals to the rest of the market, that this business is doing the right thing and that consumers are rewarding this business with more profit, thus encouraging more investment and competition.
Well, yes Apple could build it in the US, but then go bankrupt if one of their product don’t turn out well. Way too risky. Plus not every company is like Apple that can sell their product at such huge mark up based on their brand name. Majority of business out there have very low mark up
As well as an unfunded persion liability. Look at GM and Chrysler with liabilities in the billions and the US Govt with pension liabilities in the tens of TRILLIONS. No wonder firms look elsewhere for labor savings.